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8 Things to Know About Retiring in Panama Today

Panama has long been recognized as one of the world's top retirement havens. While this is still true, today's Panama is very different from the Panama of even a half-decade ago. Here are eight things you need to know about retiring in Panama today.

1. Panama City is no longer a cheap retirement choice. The cost of living in Panama's capital city has appreciated steadily over the past decade. As a result, today, Panama City no longer qualifies as a "cheap" place to call home. You can live modestly in this city on a budget of $1,500 per month, but a more realistic monthly budget for an average couple of retirees would be $2,000.

The cost of living elsewhere in Panama, however, can be much more affordable. A couple could retire to Santa Fe, for example, in the highlands of Panama, on as little as $1,000 per month.

2. Panama City rents aren't cheap, either. The lion's share of any retiree's budget is typically given over to rent. This is an important part of the reason why the cost of living in Panama City can be considerably greater than the cost of living many other places in this country. A retired couple will spend $1,000 or more per month to rent a comfortable apartment in an appealing Panama City neighborhood. In the meantime, you could rent a small house at the beach on the Azuero coast, for example, for $600 per month or less, or a house in the mountains around Santa Fe for $500 per month or less.

3. Health care in Panama is international standard and costs a fraction the cost of comparable care in the United States. However, both the standard and the cost of care can vary dramatically, not only from one part of the country to another, but also depending where you seek care in Panama City. The Johns Hopkins-affiliated Hospital Punta Pacifica in downtown Panama City offers facilities and services like those at available at any metropolitan-based U.S. hospital for perhaps half the cost. However, Clinica Einstein, located in Panama City's El Cangrejo neighborhood, offers many of the same services in a small, friendly, clean clinic environment where doctors and nurses speak English, lab tests can be processed on site, and prices are half as much or less than those at Hospital Punta Pacifica ... meaning they're one-fourth as much as U.S. costs.

4. Panama offers many options for establishing legal residency. However, the great numbers of foreigners, especially foreign retirees, migrating to this country over the past several years has resulted in a backlog at the Department of Immigration that can mean months of delays getting your visa processed and approved.

A new visa option, however, created by Executive Decree in 2012, offers a shortcut. This "Friends of Panama" visa, as it's referred to, can be processed in weeks instead of months and can even result in a work permit.

5. Panama is not the banking haven it once was. When current President Ricardo Martinelli signed an exchange-of-information tax agreement with the United States in 2010, he ended the country's position as a banking haven. Still, though, Panama, home to more than 80 banks, remains an international banking center.

6. Panama has used the U.S. dollar as its currency since 1904. This is an important advantage for American retirees today who don't have to worry about exchange risk.

7. Panama is known as the "Hub of the Americas" for a reason. This is an ideal base from which to explore Central and South America. Panama City's Tocumen International Airport is currently being expanded from 34 gates to more than 50 gates, and Panama's airline Copa offers regular flights to every Latin American country and is adding more routes all the time.

8. Panama City is hot and humid year-round. However, elsewhere in the country the climate can be very different and much more appealing. On the coast outside the capital, the hot temperatures are tempered by ocean breezes, and in the mountains around Boquete, for example, the climate is cool and crisp year-round ... even chilly.

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 28 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring and investing overseas in her free e-letter. Her newest book, How To Buy Real Estate Overseas, published by Wiley & Sons, is the culmination of decades of personal experience living and investing around the world.